How to Negotiate the Best Severance

Know how to negotiate your severance settlement.

Know how to negotiate your severance settlement.

You’ve been laid off, let go, downsized, fired; however you say it, you want to know how you’re going to get by until you find a new job. The law requires either adequate notice to give you time to find a new job or cash in lieu of notice. However, most employment agreements include severance packages beyond the bare legal requirement, and that’s where the negotiating comes in. To help figure out how to ensure a fair severance package, we get advice from Don Smith of Western Compensation and Benefits Consultants, Emma Hamer of eHamer Associates Ltd. Career and Performance Consultants and Christopher McHardy, a partner in the labour and employment group at McCarthy Tétrault law firm.

Do Your Homework

You can’t negotiate if you don’t know what you’re entitled to. “It’s a matter of doing your homework and having a good understanding of what a good settlement would be,” says Smith. Check your employment agreement and look up the Employment Standards Act online. You can also ask your HR department how your severance was calculated, advises Hamer.

Know Your Value

Beyond the basics required by the law and by your employment agreement, how do you know how hard you can push when negotiating a severance settlement? The courts typically consider four main criteria, says McHardy: your age, length of service, degree of responsibility in the organization and availability of comparable work in the marketplace.

What Are You Entitled To?

The Employment Standards Act specifies cash settlements, determined by salary and length of employment. But employment agreements typically go beyond the bare minimum because employers want to be known as looking after their employees. Interpreting those agreements is where the negotiations come in. Beyond the legal minimum, severance packages might include leftover paid vacation days or health benefits while you’re looking for a new job. One option you might propose, Hamer suggests, is to ask your employer to halve your severance and instead pay for a career counsellor.


Save the Expense

Your first instinct might be to hire a lawyer, but that isn’t always necessary. “It’s always far better if you can agree on a reasonable settlement because the alternative would be to employ a lawyer or take legal action, and that can be very expensive,” says Smith. If you’re offered a package that looks reasonable and fits the terms of your contract, then pocket the package and leave smiling.

Play Nice

Of course you’re upset about losing your job, but the last thing you want is to let your emotions drive your negotiation. There’s no use in burning bridges, McHardy says: “Employees should remember, particularly if they still stand to get a good reference: conduct yourself professionally and you’re going to be treated professionally.”